The chairman of the new Private Company Council envisions trying to
change FASB standards for all users before attempting to create
exceptions or modifications to standards for private companies.

The chairman, Billy Atkinson, said during an AICPA fall Council
presentation Monday that he would favor differential standards for
private companies only after exploring with FASB the idea of
modifications for all companies—private and public.

The Private Company Council (PCC), created by FASB’s parent
organization, the Financial Accounting Foundation (FAF), will meet for
the first time on Dec. 6. Atkinson said Monday that the council’s
approach and processes have not yet been discussed. He was named
chairman of the PCC despite his past opposition to differential
standards beyond disclosure nuances.

Randy Myeroff, an Ohio CPA whose firm audits about 250 private
companies, asked if Atkinson would keep an open mind when it comes to
measurement and recognition differences for private companies.
Atkinson said he would. But in his speech and an interview afterward,
his focus dealt with broader fixes before exceptions and modifications.

“If we do have fixes, we should first evaluate the fixes from the
standpoint of all the users, not just the private company users,”
Atkinson said in an interview Monday following the council session.

Such a broad process would likely be slower than a system in which
the PCC simply recommended exceptions or modifications to U.S. GAAP
for private companies. During Monday’s session, AICPA President and
CEO Barry Melancon said Atkinson was describing a “fairly lengthy
process.”

As described by the FAF, the PCC was established with a twofold mission:

To identify and vote on GAAP modifications and exceptions for
private companies, which would be subject to endorsement by FASB.

To serve as the primary advisory body to FASB on the appropriate
treatment for private companies for items under active consideration
on FASB’s technical agenda.

“At the get-go it’s very important that we begin to see some
action—some real substantive confirmation of our purpose,” Atkinson
said in an interview after his speech.

But he said many public companies have the same angst as private
companies with regard to certain financial reporting and measurement.
So he said it makes sense to include them in the “decision tree” in
this process.

“My viewpoint is that you can’t rush it,” Atkinson said. “It took a
while to get here. We’ve got to take a while to assess the process of
promulgating standards going forward, which I believe FASB has already
done. But in the look-back we’ve got to be very careful and see if
there’s an opportunity to fix things more broadly.”

He also said the idea of a holistic approach “is really emanating
from me and that’s not a decision we’ve made yet” as a council.

GAAP exceptions approved by the PCC are subject to endorsement by a
simple majority of FASB members. If FASB fails to endorse a PCC
decision, it must provide public, written notice of the reasons. FASB
is developing a framework
for making decisions about whether and when U.S. GAAP should be
modified for private companies.

Atkinson opposed the Blue-Ribbon Panel on Standard Setting for
Private Companies supermajority that called for the creation of a
board independent of FASB that would make exceptions and modifications
to U.S. GAAP for private companies. He served as chairman of the
National Association of State Boards of Accountancy from 2009 to 2010,
and retired from practice after working for 39 years as an audit and
risk management partner in PwC’s private company services unit.

During Monday’s session, Melancon asked Atkinson to comment on the
message FAF was sending by naming a Big Four accounting firm veteran
to lead the PCC. Atkinson said he gained experience with growing
private companies in the Houston office of his firm, which consisted
of 25 people when he started there in 1974. He said he also is on the
board of directors of Atkinson Candy Company, which is private.

“One has to look back at my career and my experience and the market
in which I practiced the dominant part of my career to see that my
reference to private companies and all the attributes of financial
reporting and all the dynamics of running a private company are in my
resume,” Atkinson said.

Atkinson said speaking in front of the AICPA Council provided him
with an “acid test” for the task the PCC has ahead. Reaction to his
agenda was skeptical.

“This Council overwhelmingly endorsed this concept of
differentiation. I was enlightened to hear you say that you want
input,” said Robert R. Harris, a former AICPA chairman. “This Council
has given it three times as leaders of the profession. Ten thousand of
our members contacted FAF. You say you want input. We give input. And
honestly I would tell you I would bet that all 10,000 members feel
that we were not listened to by FAF.”

“These people are passionate,” Atkinson said in an interview. “They
have a concern. They have an angst that’s very well justified. And so
I appreciate their anxiety about this topic. And the reality is that
the process has resulted in this type of an organizational approach
within FAF and FASB and I respect that approach as we go forward. I’m
not going to be a rebel or a deviant to that approach.”